Long-term Unemployment: effects on finance & tips to plan budget

Sudden break out of the Covid-19 virus impacted the economy of every affected country. There is no doubt that the world economy downgraded to a great extent. Besides, the entire business industry faced significant losses.

Gradually, with increasing losses, the field of employment got a huge blow, and lots of people lost their jobs. Now, almost every unemployed person has a family and is the only earning person. While a person loses a job, it becomes harsher. However, there are many direct lenders where unemployed people can apply for the loan.

There are many loan agencies situated in Ireland, which lends money as per their need. But even after quick monetary assistance, a person could not stay without a job for a long time. Thus, long-term unemployment affects a lot.

What is long term unemployment?

As per the Bureau of Labour Statistics (BLS), if a person remains unemployed for 27 consecutive weeks, then his name comes under the count of long-term unemployed people. Incidentally, the number of names under such a list is rising day by day. The government of Ireland was held responsible for this pandemic situation for such long-term unemployment.

The statistical survey brings before us a drastic picture of unemployment. According to the survey, the number of unemployed people has 0.24 million within one month. Thereby, the number of people that was 3.75 million in May 2021 has turned into 3.99 million.

Only in the month of June, the number of unemployed rises to 1.2%, which enhances the total percentage to 42.1%. Compared to 1981, which was considered due to the highest unemployment rate, 2021 has surpassed even that year. Noted that, in 1981, the entire rate of unemployment was 26%.

Experts have found out the main reasons for such high growth in long-term unemployment. According to them, the intervention of cyclical and structural unemployment is the cause. Generally, structural unemployment takes place when the skill of people failed to meet the market requirement. 

On the other hand, cyclical unemployment takes place due to a prolonged recession period. Generally, when people take leave due to medical issues or any other emergency situation for a long time, then it may take place. As in between that period the organization finds replacement of that person. In this way, cyclical unemployment takes place.

Unbearable financial effects of long term unemployment

Income is the basic need of our life. To keep a stable condition of this basic need, one should always start earning. Without earning money, it is impossible to manage personal finance. For most of the people source of income is their jobs.

Unemployment snatches away jobs and creates a hindrance in the way of source of income. Although there, the money lenders of Ireland have introduced unemployed loans with which one can mitigate the basic needs. However, the effects of long-term unemployment are really unbearable.

• Direct reduction of income: Reducing the level of income affects badly. A family have some necessary spending habits which are hard to minimise. While the expense amount is established on the range of income, in that case, if the source of income stops completely, then life becomes unbearable.
• Failure of repayment: Almost every person has some amount of debt. Nowadays, the borrowing habit of people has increased due to the easy monthly instalment option. Generally, every credit card company offers this ease of monthly repayment after buying any type of goods.

So, when the source of income stops, a person can be hardly able to repay all his small monthly installments. In this way, the borrower becomes a defaulter.

• Redeeming all the investment plans: While the source of income was stable, there was no worry about the future. You may have invested money in different investment plans. Lack of income creates a deficiency during investment. 

This is because to invest money. A person needs to put in a particular amount every month. So, when the source of income completely freezes, one can hardly save money. Instead, the existing investment plan needs to be redeemed.

• Utmost financial crisis: There is no doubt that financial crisis is inevitable with long term unemployment. A person can hardly manage his financial need after he loses his job. Bills remain unpaid. Repayment failure, no budget maintenance, lack of treating diseases etc., are some instances of the massacre.

Such conditions are clearly denoted an intense financial crisis. In such a scenario, although the person tries his best to bring back the previous economic situation, he failed due to extended unemployment. However, being a family man, one can’t sit hand in hand.

Instead, he needs to plan the budget and apply for another job. Only then he can bring back his previous financial condition. So, here we will discuss such budgeting techniques for the sake of the welfare of unemployed people.

How to plan the budget for being unemployed?

Undeniably, there is no exception to budgeting. If a person manages to stay within the budget at each and every step, it becomes easy for him to run the family. However, when you lost your job, it is quite impossible to stick to the previous budget.

You need to remember that the pattern of budget changes with the current financial situation. Naturally, it is for the management of finance. However, many direct lenders offer cash loans for unemployed people of Ireland.

Therefore, you can take monetary assistance by applying for a loan also. But after getting a cash loan, you need to manage finance even then because it is like a one-time- fund. So here are some tips for planning a budget during extended unemployment.

• Start your planning soon

This is the first step of planning a budget while you have no possibility to find a new job opportunity. Even after you lost your job, hardly all those expenses will come down. Moreover, you need to pay the rent, monthly installments, school fees, and electricity bills, and so on.

Unlike everyone, a person will also try to pay all these causes of expenses with his saved money. If it runs for a long time, then all your savings will become zero within no time. For this reason, we suggest starting the budgeting soon.

Only after that, you can quickly minimize the chance of exhausting savings. Besides, the sooner you start the planning, there is less chance of facing a financial crisis.

• Reassess your budget

When you have lost your job and became unemployed, then your existing budget should also change. This is because the previous budget was based on a particular income range. Now, as you lost the job, there is hardly any fixed source of income.

This demands the necessity of change in certain expense habits. For instance, you should start to reduce the expense of electricity bills, rental bills, and repayment structure. Now, to reduce those expenses, you can begin negotiating with your tenant and electricity office.

After reassessing the budget, indeed, the entire expense amount will come down. The goal of your budget is to minimize the expenses as soon as possible.

• Discriminate between need and desire

As mentioned, the expense amount should come down. So, while reassessing, a person should discriminate between what comes under his desire and what comes under the need? Naturally, those who come under condition are the utmost priority.

However, you can jot down those things under desire which you do not require immediately. It is imperative to discriminate between need and desire while unemployed and in the available time. During unemployment, only focus upon those who come under need.

Undoubtedly, planning a budget helps to reduce all those expenses which were less considered. That is why during long unemployment, it is essential to plan the budget accordingly. As only then a person can minimize stress levels and maintain the basic needs of a family.